Poolbeg: Is the Community Being Short-Changed by €5 million?

In theory, a community fund for the Poolbeg waste-to-energy plant should lessen opposition to the project and help to bring those who live in the area onside.

But there are questions about whether the communities in Ringsend, Irishtown and Sandymount are being short-changed by millions.

Last week, Dublin city councillors voted to write to An Bord Pleanala to ask them to clarify how the fund should be calculated. Some think that an extra €5 million for residents of communities affected by the plant could hang on what An Bord Pleanala says.

The capital contribution to the community gain fund should be €15 million, and not the €10.38 million proposed by Dublin City Council, says Sandymount resident and An Taisce member Joe McCarthy, who was the first to raise the issue with the council.

And McCarthy isn’t the only one concerned.

“Five million euros is a very, very serious issue, you know, and it’s already contentious the whole issue out there,” said independent councillor Mannix Flynn. “In my view, there is a case here, there’s a very very, very strong case here (…). I really can’t see any community gain here if this thing is going to cascade, because this could be another scandal in the making.”

There’s been a debate over all this for a while, but to recap: it is a condition of the planning permission for the Poolbeg plant that Dublin City Council and US waste giant Covanta – who are behind the project – create a community fund for local neighbourhoods, which is to be spent on new amenities, such as sports facilities, playgrounds, and community services for elderly people.

The start-up lump sum for the fund was set by An Bord Pleanala at three percent of the capital costs of the project, with later annual contributions.

But there’s been fierce disagreement about what “three percent of capital costs” means, whether it means three percent of just construction costs, or of financing costs too.

The Case For More

Dublin City Council says it is just construction costs, which would put the community gain fund at €10.38 million.

But McCarthy, who is the An Taisce member on the council’s environment committee, which provides some oversight for the project, points to Department of Finance guidelines for how to account for public-private partnership projects.

(Dublin City Council’s press office said that the Dublin waste-to-energy project does fall within these accounting guidelines.)

These guidelines note that the total capital cost of the project “should represent all the costs (including VAT) associated with the construction of the physical asset to the point of becoming available for use”. That includes short-term funding costs such as capitalised interest, the guidelines say.

So, says McCarthy, the capital costs for the purpose of calculating the community gain fund should also include the capitalised interest.

Based on Covanta’s filings in the US, that would add an additional €154 million to the capital costs, and therefore increase the community gain fund to roughly €15 million.

Under the first contract for the project in 2007, none of this was an issue, McCarthy said, because there weren’t any financing costs. Only later, post 2010, when there was a renegotiated contract between Covanta and Dublin City Council that led to a cost for financing, did that become an issue, he said.

Opposing Arguments

Covanta’s director of communications, James Regan, didn’t reply to a query sent on 13 September, asking why capitalised interest had been left out when calculating capital costs for the purposes of the community gain fund.

But at last week’s meeting of the environment committee, city manager Declan Wallace stuck to the line that capital costs in the context of the community gain fund just mean construction costs, and no more.

And it’s nothing to do with accounting standards, he said. “It doesn’t even enter into it. It’s a simple situation that we put forward a community gain, we put it forward in our EIS [environmental impact statement], we said that it would be three percent of construction costs,” said Wallace.

Actually, in the environmental impact statement, the term “capital cost” is also used. But it does reference the construction costs when it says: “Based on the estimated construction cost of €266 million [which was the estimated construction cost at the time] the capital contribution will be of the order of €8 million.”

So, in Wallace’s view, the ruling of An Bord Pleanala which uses the words “capital cost” doesn’t stand alone. It should be read in reference to what Dublin City Council put in its environmental impact statement, he argues.

It’s unclear whether there’s been any discussion within Dublin City Council’s executive, or between Dublin City Council and Covanta, about how the community gain fund should or has been calculated.

We filed a freedom-of-information request back in March for all correspondence within Dublin City Council and between the council and Covanta that relates to how the community gain fund has been calculated. We got a few documents in response, most of which were already public.

In May, our appeal of this response turned up one letter. We’ve filed another appeal with the information commissioner to see if any other correspondence comes to light.